 |
| Work continues on the newly named Toyota Center, a $202 million arena scheduled to open in the fall. |
The 20-year, $95 million deal that puts the name Toyota Center atop the Houston Rockets' new downtown arena positions the team to continue its international branding efforts while still doing business principally with a local company.
The deal, announced last week, was negotiated by the team with Houston-based Gulf States Toyota Inc., a privately held venture that controls Toyota's distribution in Texas, Mississippi, Alabama, Louisiana and Arkansas. California-based Toyota Motor Sales USA and Toyota Motor Corp. in Japan signed off on the deal, but Gulf States Toyota and the individual dealerships it represents will be paying most of the fee.
Toyota USA will fund an undisclosed portion of the deal. Information about what, if any, payments would come directly from Toyota Motor Corp. was not immediately available.
The $202 million arena is scheduled to open this fall. Gulf States officials were unavailable for comment at press time.
"Gulf States Toyota for sure had the primary interest, but Toyota Motor Sales in California and the dealership network in the region is involved, and each is paying their fair share and will have their share of the benefits as well," said Jeff Knapple, president of Envision, which was hired by Gulf States to negotiate the deal. "It is a local and certainly national deal, but we would also argue that there is an international spirit to this because of Yao Ming's appeal beyond the U.S., and that was not lost on the deal."
The Rockets clearly have had an international marketing flair in the past year, since selecting China's Yao with the No. 1 overall pick in the 2002 NBA draft. The team signed a sponsorship deal with Chinese beer Yanjing, created a Mandarin-language radio show and developed a Mandarin-language Web site.
Along with naming rights to the arena, Toyota gains from the deal exclusivity in the team's auto and truck sponsorship category, and other carmakers will be limited in buying advertising on local television game broadcasts, Knapple said. In addition, the Rockets will build a "Tundra Zone" inside the main bowl of the arena that will feature a Toyota Tundra truck display.
"It is the only arena with a truck vehicle display, and it will be a showcase for the dealers to bring in customers as well as creating exposure," said Tad Brown, vice president of corporate development for the Rockets.
For the Rockets, the deal allows the team to put an international, blue-chip name atop their building though the deal is with a locally based company and its dealerships.
"This is a unique deal because this really is a five-state deal where many of the assets will be leveraged in those five states, yet the Rockets can sell it as an international deal," said Ethan Green, vice president of Redmandarin, a New York-based sponsorship consultant familiar with the deal. Redmandarin was asked by Gulf States to bid on the deal, Green said, but ultimately lost out to Envision for the business.
"They found a great way to get an international name through a local channel," Green said.
The Rockets began looking for a naming-rights partner more than a year ago, hoping to secure a deal before the arena's opening to maximize the sponsorship value. The team, however, set out in a saturated market. In the past three years, the Houston Texans signed 30-year, $300 million naming-rights deal with Reliant Energy Inc. while the Houston Astros signed a $170 million, 28-year deal with Minute Maid Co., which replaced Enron Corp. as the team's naming-rights partner.
"You had two naming-rights deals prior to our opening and you had a relatively depressed market," Brown said. "This deal was done primarily due to the long-term commitment by [Toyota] to Houston and Texas. That's the primary focus of the deal. The global exposure is an added value, but [the company] made it clear of their commitment to Texas."
Toyota currently is building a new North America vehicle assembly plant in San Antonio, a project calling for an initial investment of $800 million by the company and that is expected to create 2,000 jobs.
Under terms of the Rockets' lease agreement with arena owner Harris County-Houston Sports Authority, the team will pay $200,000 per year from the naming-rights revenue as part of an annual $8.5 million rent payment.
